2013 price excitement not over

I remember the trip well. I should have learned something from my experience. It was late June of 2008. Sharon had a conference in Milwaukee. Having been to that city only once before in my life, I thought it would be fun to go along. We drove east on I80 to Des Moines. There we were notified that it would be necessary to detour north to US 20 and then head east. The problem was that the Interstate system was closed because of flooding. As we made our way through eastern Iowa and southern Wisconsin, it was obvious that farmers in those places had some major cropping problems.

From Madison to our destination, the water was right to the edge of the highway in many locales. After a few days in the city, we headed back to Nebraska. By then, it was nearly the end of June. Portions of the corn crop were just barely visible from the highway. It seemed that there was no way some of the best crop growing fields in the world were going to have a normal crop, if they had any crop at all.

I came home, from the Wisconsin trip, so bullish on the soybean and corn markets that I could hardly contain myself. The markets were bullish also, but not for long. In fact, the peak of the corn markets came very near the July 4 holiday. From that point on, it was downhill all the way to harvest. I was lucky in my marketing that year in that I make it a rule to not hold unsold grain past July 4. As a result, I sold out when I cleaned out the bins. I hit the highest price of the year on that move. There is a rule of marketing advisors that says “If you are ever right, never let them forget”. I would like to take credit for being smart in 2008. In fact, it was a matter of my marketing plan matching what happened in the trading world that one time.

The lesson to be learned from that experience applies in today’s market. It is dangerous to base marketing decisions on one location or one time period. Last fall during harvest, very little of the grain raised here in eastern Nebraska went into farmers’ bins. Most was sold at harvest or soon after. Grain farmers wondered where livestock farmers and ethanol plants were going to get corn to keep their operations going in April, May and June. Observers tell me that there are now lines of trucks at the terminal elevators and processors. Obviously, they are getting their supplies somewhere. Now the market is telling us that there is no problem.

I still have to wonder if the supplies of corn and beans are as large as conditions seem to indicate. It is almost half of a year before the next crop of corn is available. Supplies of soybeans from South America will be available sooner than that if Brazilians can get the crop shipped. A lot can happen between now and harvest. Even with the sad condition of today’s price situation, I cannot imagine that the excitement is over for 2013.